Financial Firms Ready Backup Plans

By

Andrew R. Johnson And

Matthias Rieker

Updated Oct. 29, 2012 10:19 a.m. ET

Big U.S. banks and tens of thousands of their New York metropolitan-area employees were bracing Sunday to open the workweek to disruption and uncertainty, as the region hunkered down for its second major storm in a little more than a year.

Hurricane Sandy looms over the northeast, triggering evacuation orders for hundreds of thousands of residents, nearly 8,000 canceled airline flights, mass closure of schools and public transit systems and the closure of New York Stock Exchange. Photo: AP.

With Hurricane Sandy roaring up the East Coast with winds above 75 mph, financial institutions were gearing up for the use of backup plans previously put into effect in August 2011 for Hurricane Irene.

On Sunday, companies with operations in Lower Manhattan, including American Express Co., J.P. Morgan Chase & Co. and Citigroup Inc., were planning to shutter offices, prepare locations outside the city and accommodate customers affected by the storm. Others, including Goldman Sachs Group Inc. and Wells Fargo & Co., emphasized the need for workers to exercise caution and to be on the lookout for updates from managers.

Some bankers and traders, meanwhile, were resigned to working at home for a day or more. New York Gov. Andrew Cuomo declared a state of emergency. Officials were preparing to shut down transit systems Sunday evening and were warning that power outages were possible as soon as the expected heavy rains and gale-force winds make landfall.

"It sounds like it's going to be really, really bad," said Barry Ridings, a veteran Lazard Ltd. banker who advises companies on bankruptcies and other balance-sheet restructuring deals. "Since the trains aren't running, obviously people should stay home. I'm going to be working at home."

Mr. Ridings lives in Princeton, N.J., and is known to arrive early at Lazard's midtown offices. He expected a scheduled lunch with a client traveling from Atlanta would be canceled but hoped to carry on with an afternoon meeting, if in modified form.

"If there are no trains, you can't even get to New York, so we'll just do everything on the phone," he said.

American Express, based in the World Financial Center on Lower Manhattan's West side, told employees Sunday that its Tri-State-area offices would be closed Monday. The company planned to let employees know by Monday afternoon whether regional offices would reopen Tuesday, a spokesman said.

J.P. Morgan's Chase Manhattan Plaza and 4 New York Plaza buildings in the financial district will be closed, representatives of the bank said Sunday. Employees can work remotely, though the Park Avenue headquarters and other nearby midtown buildings, including the 383 Madison Ave. skyscraper that houses its investment banking operations, will remain open in case employees need to get to the office, a spokeswoman said.

The bank employs 25,000 people in New York. Branch closures were being decided on a case-by-case basis. The bank has been testing remote log-ons all weekend to ensure workers can access systems from home, a second person said. The bank has back-up systems in New Jersey that it can use as needed.

Citigroup Inc., whose headquarters are in Midtown Manhattan, said it would keep closed all branches in mandatory evacuation areas and three other New York region branches in low-lying areas. The company is evaluating what precautions to take at other retail-banking locations.

The nation's third-biggest bank by assets said it will shutter its massive investment banking headquarters in downtown Manhattan, which is home of several trading floors, because it is in an evacuation area.

"All staff based in Citi facilities within mandatory evacuation zones must invoke their work-from-home strategies for Monday and Tuesday unless they are in business-critical roles that have established alternative work locations," the bank said in a memorandum to staff.

Employees in Manhattan, including its headquarters at Park Avenue, and its Long Island City, Queens, office tower, "should be accessible for critical personnel only; non-critical personnel should invoke their work-from-home strategies," the memo said.

An internal memo from Goldman Sachs Group Inc. reviewed by The Wall Street Journal advises workers of the securities firm, with offices in Lower Manhattan, that the company will be open for business Monday but that employees should exercise caution.

"Individuals deemed critical to the operation of the firm will be notified by their divisions to come to work tomorrow, including at 200 West and 30 Hudson, but only if they can get to work and back home safely," said the memo, which was confirmed by a Goldman spokesman.

TD Bank, the U.S. retail-banking subsidiary of Toronto-Dominion Bank, said it would close its branches in Atlantic County, N.J., at 2 p.m. Sunday because of mandatory evacuation orders. The bank said it hadn't decided about closures of branches elsewhere. With almost 360 branches, TD Bank is the seventh-largest retail bank in the metropolitan New York area, according to the Federal Deposit Insurance Corp.

Wells Fargo, based in San Francisco but with hundreds of offices in the region thanks to its 2008 acquisition of Wachovia Corp., said it has "already closed a limited number of stores and we anticipate more."

Wells said it has 23,800 workers in 1,170 locations in the storm's projected path.

Bank of America Corp., Charlotte, N.C., said in a statement that safety concerns "will help drive our decision-making. We have processes and contingency plans in place to help manage the potential impact."

A spokesman for Bank of New York Mellon Corp., the seventh-biggest U.S. commercial bank, said on Friday the New York bank was continuing to monitor the hurricane's path and working on its contingency plans.

Other financial firms were also trying to blunt the impact of the storm on their employees. Money manager Legg Mason Inc., headquartered in Baltimore, sent out a note to employees Friday encouraging them to work from home. The firm, with $651 billion in assets under management, has about 1,000 employees in New York City and 3,000 total employees. A spokeswoman for Legg Mason said employees will still be able to trade while working remotely.

Many companies were still monitoring the situation Sunday. A spokesman for AllianceBernstein Holding LP, headquartered in New York, said the firm, a unit of French insurer AXA SA, would be discussing the storm's impact in a late afternoon meeting.

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